2019 YEAR-END WRAP-UP FOR BANGKOK CONDOMINIUM MARKET

Real Estate Press Releases Monday December 23, 2019 14:31
Bangkok--23 Dec--CBRE

Caught between slow economic growth, high household debt and growing supply, 2019 has been a very challenging year for the residential market in Bangkok, according to CBRE, an international real estate consultancy company. Developers have put the brakes on launching new projects as market sentiment declines. Foreign sales have also been impacted by the strong Thai baht and weak global economic growth, especially in China.

Weak domestic demand has prompted developers to reconsider new condominium project launch dates, revise products and postpone land acquisition for new developments. Despite a strong start to 2019, the market has slowed down more visibly since Q2 2019. In Q3 2019, CBRE Research has seen the lowest number of new downtown condominium units launched in the third quarter since 2015, at 1,268 units, compared to 7,147 units in the same period last year.

While CBRE believes that the average selling price for condominiums in Bangkok will not drop, because the land cost remains high, an increase in price will be at a slower rate compared to previous years. The average selling price in downtown Bangkok only grew by 0.9% y-o-y to THB279,740 per square metre in Q3 2019, while midtown Bangkok's average selling price only increased by 0.05% y-o-y to THB99,943 per square metre. Affordability will be the key issue in the market in 2020, as locals have less spending power due to increasing household debt and a weak economy.

The government and the Bank of Thailand have taken various measures this year to stimulate the residential market. The tighter loan-to-value (LTV) regulation, which CBRE believes was a well-intended move to keep the market from being flooded with speculative buyers, has dampened domestic demand, as mortgages become harder to obtain. Both the transfer fee and mortgage registration fee have been reduced to 0.01% from 2% and 1%, respectively, for property with a price of less than THB 3 million.

The policy rate has been cut twice this year to encourage spending, from 1.75% to 1.25%, which is similar to the rate during the global financial crisis. However, in a situation where the economy is weak with limited spending power, CBRE Research believes that this reduction did not have a significant impact on the property market.

The Thai baht has continued to appreciate since the beginning of the year, which has resulted in Bangkok properties being more expensive for foreign buyers to invest. As of Q3 2019, the baht has appreciated 9.5% against the Chinese yuan, and 6.1% against the US dollar, compared to last year.

"With the growing uncertainty in the residential market, developers will need to minimise and diversify investment risks, creating a more diverse revenue stream. Many developers have already started looking at recurring-income properties or mixed-use developments, especially on large land plots, to make their projects more attractive, with complementary uses in a single compound. Key resort destinations like Hua Hin, Pattaya, Phuket and Krabi present opportunities for developers as Thailand's infrastructure is expanding significantly and tourism industry remains as strong as ever," said Ms. Aliwassa Pathnadabutr, Managing Director of CBRE Thailand.

Follow us on
  • Facebook: CBREThailand
  • Twitter: @CBREThailand
  • Instagram: CBRE Residential Thailand
  • LINE@: @CBREThailand
  • LinkedIn: CBRE Thailand
About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE established an office in Bangkok in 1988, followed by its Phuket office in 2004. CBRE Thailand has grown to be the leading real estate services provider, offering a broad range of integrated services, including property sale and leasing, facilities, transaction and project management; property management; investment management; appraisal and valuation; and strategic research and consulting. Please visit our website at www.cbre.co.th


Latest Press Release

Banyan Thailand Group launched “Banyan Village” the spacious villa with pool & garden for rent

Banyan Thailand group is introducing Banyan Village, an initiative offering temporary housing to Thai and foreigners who prefer to stay in Hua Hin in the coming months. Banyan prepared 28 pool villas of the former Banyan Resort that can be rented on a...

Photo Release: MQDC Celebrates Inspiring Images of Year-End Festival from “Beautiful Bangkok 2020: A Blossom of Happiness” with RSTA and TAT

(from left): Mr. Keerin Chutumstid, President of the Property & Service Business of MQDC; Ms. Nattaporn Chevamongkol, a representative of the Ratchaprasong Square Trade Association (RSTA); Mr. Dmytro Nidzii, winner of Beautiful Bangkok 2020: A...

Strong Interest in London Property by Thai Investors

CBRE, a leading international property consultant, found an increase in Thai property investors in London, while London residential property remains in high demand and the pound sterling continues at a low rate for the fifth consecutive year, revealing...

Malaysia's Sunway Pyramid Mall cuts RM3 million in annual energy cost for seven consecutive years with Johnson Controls' technology

Johnson Controls, a global leader in building technologies and solutions, has enabled Sunway Pyramid mall, one of the largest shopping malls in Malaysia, to save more than RM3 million in annual energy cost consistently since the retrofit in 2012. The...

WDC Spends 15 Million Baht to Open New “WDC Showroom (Pattaya Branch)”

WDC Spends 15 Million Baht to Open New “WDC Showroom (Pattaya Branch)” to Attract Purchasing Power in the East, With Emphasis on the Leader in the Premium Wall and Floor Decorative Materials Import Market “Western Decor...

Related Topics